Of Babies and Bucks

The Credit Slips bloggers are engaged in a virtual enterprise, which means we sometimes don't see each other for a long time. One of my fellow bloggers recently asked "What's up?" and learned that I had a new baby two months ago. That experience, along with trying to stem the tide of "I want it! I need it!" that comes with having two preschoolers during the holidays, has left me thinking about how we teach children about money, debt, and consumerism.

There apparently is very little research on financial education for children ages 2-7. Chapter 3 in Consumer Knowledge and Financial Decisions (ed. Douglas Lamdin; Springer 2012), explores the relationship between cognitive development and children's understanding of personal finance. I found its identification of the key concepts of personal finance for young children helpful. They list:  numbers, time, income, markets and exchange, institutions, and choice. They also explore how some concepts emphasized in young children, for example being "nice" or "fair", are hard to square with the idea of a financial transaction as a matter of price and market conditions. For me personally, this explained a great deal of the reasons that the Monopoly board game has for generations resulted in children in families fighting with each other!

The Wall Street Journal had a recent article that reviewed several money games for kids. Disney, Visa, and several other companies have online games that aim to teach money skills. They include fun gimicks like the "inflation wolf." Even Sesame Street has ventured into financial education for young children, as shown in this clip reviewed by PBS. My oldest son's kindergarten class requires the children to "price" the daily snack they brought for the class. All the kids have a stock of coins that they use each day to "purchase" the snack. My little financial wizard Luke has priced his snack every time at 10 cents--for 7 months now! (I think we can rule out a career as a corporate finance  lawyer at Wachtell for the little guy).

I know in my house we aren't going to do allowances or paying for grades. But I haven't gotten much further than this as a way of showing the value of a credit card. Suggestions welcome! What strategies have you used in teaching your children about financial concepts? What did your parents do that worked or did not work?